For the third quarter 2016, Hertz Global Holdings Inc. has reported its total revenues as $2.5 billion, a 1% decline versus third quarter 2015.
Adjusted earnings for Q3 were $329 million versus $430 million in the same period last year, a decline of $101 million, according to Hertz.
For third quarter, Hertz reported a net income (from continuing operations) of $44 million compared to a net income of $217 during the same period last year. On an adjusted basis for Q3, Hertz’s net income was $134 million compared to a net income of $182 million in Q3 2015.
For the U.S., Hertz’s total RAC revenues were $1.7 billion in Q3, a decrease of 2% from last year — due to a 3% decline in rate per day and a 1% increase in volume. According to Hertz, transaction days increased by 1% while pricing (total revenue per transaction day) decreased by 3% year-over-year. Adjusted earnings for Q3 were $199 million, an $85 million decline from last year.
"We are making progress in foundational aspects of our long-term business improvement plan, implementing new systems, improving customer service levels, and launching new products," said John Tague, Hertz’s president and CEO. "However, our near-term financial performance continues to be uneven. A customary vehicle depreciation rate review near the close of the third quarter resulted in a substantial depreciation adjustment, particularly on compact and mid-sized vehicles, that together with rental volume at the low end of our expectations as well as higher net operating and administrative expenses impacted our performance.”
U.S. vehicle utilization was 82% for the third quarter, a decrease of 60 basis points from last year, according to Hertz. This decrease is due to a higher number of vehicles out of service from manufacturer recalls.
In Q3, Hertz’s total international RAC revenues were $683 million, a decrease of 1% from third quarter 2015, according to the company. Excluding a $13 million unfavorable foreign currency impact, revenues increased 1% — driven by a 2% growth in transaction days and a 1% decrease in total revenue per day.
Worldwide customer satisfaction improved year-over-year for the Hertz, Dollar, and Thrifty brands by more than seven points for the third quarter. This is the seventh consecutive quarter of year-over-year improvements for all three brands, says the company.
Hertz achieved cost savings of approximately $90 million in the third quarter; the company is on pace to hit its previously announced target of $350 million of full-year 2016 cost savings.
"While we remain on pace to deliver $350 million of cost reduction in 2016, we fell short from a timing perspective on our internal stretch target for cost reduction,” added Tague. “Considering this and the potential for an additional depreciation rate adjustment in the fourth quarter, we are updating our 2016 outlook and taking incremental actions to reduce costs and drive revenue."
For the full-year 2016, Hertz has updated its estimates of adjusted earnings; it expects that fourth quarter 2016 results will be affected by factors such as higher vehicle depreciation due to lower residual values. Now the company expects that its full-year revenue for the U.S. will increase 2% to 3%. The U.S. RAC net depreciation per unit is predicted to be $295 to $300 per month.